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PERU: Suspension of Mining Operation Merely a Placebo

by Milagros Salazar (lima)

Tuesday, March 09, 2010

Inter Press Service

Although the Peruvian government reported that it had suspended the exploration activities of the Afrodita mining company in the country's northern Amazon jungle region to avoid further protests by local indigenous people, officials took no actual steps to bring the firm's work to a halt.

So what really happened?

After a meeting of the Council of Ministers, Prime Minister Javier Velásquez and Minister of Energy and Mines Pedro Sánchez announced on Feb. 17 that the Peruvian company's permits to drill in the rainforest had been suspended.

The two officials said OSINERGMIN, Peru's mine and energy regulatory agency, had stated that the decision would be in effect until the company provided evidence that it had authorisation to use the land where the exploration activities are being carried out.

'We have reached a decision on the Minera Afrodita business,' Velásquez repeated in parliament two days later. 'OSINERGMIN just suspended the company's activities. And it is not like the company says - that we have given in to blackmail (by local indigenous protesters); what happened was that the firm did not comply with what is established by law.'

Leaders from 52 native communities complain that the company has polluted two rivers in Awajun indigenous territory with the mercury and cyanide used in mining operations.

Afrodita has been exploring for gold and silver in the Cordillera del Cóndor mountain range in the northern province of Amazonas, 15 km from the Ecuadorean border, despite protests by the local Awajún Indians.

Many local members of the Awajún ethnic group were also involved in a two-month roadblock and protests near the northern jungle town of Bagua - also in Amazonas - that ended in a tragic clash with police on Jun. 5, 2009 in which at least 10 native demonstrators and 23 police officers were killed.

The mining boom in Peru that has resulted from soaring minerals prices over the last few years, and the passage of laws aimed at opening up the jungle to the extractive industries, have led to numerous conflicts between mining companies and native communities protesting the environmental and social effects of the mining industry.

After the government reported the suspension of Afrodita's activities, OSINERGMIN inspection and oversight chief Guillermo Shinno told IPS that the company could continue its prospecting operations as soon as it obtained a permit showing it had surface rights to the land in question.

'We have to clarify that OSINERGMIN has not brought the company's exploration activities to a halt; it merely sent the firm an official letter indicating that it cannot engage in such activities without a land-use permit,' he said.

In its Feb. 11 letter to the company, the regulatory agency cited a document in which the Ministry of Energy and Mines informed the company that the Superintendencia de Bienes Nacionales (Superintendence of National Assets) had not issued Afrodita a permit granting it surface rights or ownership to the land where it has already begun to operate.

In other words, OSINERGMIN's letter merely notified the mining company that it needed a permit. The firm has not yet presented its request for the permit to the Superintendencia, sources in the government office told IPS.

In a statement, Afrodita said it would 'temporarily' bring its drilling operations to a halt while the administrative problems were worked out.

But OSINERGMIN said that 'no appeal is necessary, because no administrative steps have been taken' to stop the company's activities.

Afrodita also said that during the halt in activities, it would focus on analysing geological reconnaissance data collected in the area where it is prospecting mainly for gold and silver.

Minera Afrodita is owned by Peruvian geologist Carlos Ballón, who is also a director of the Cardero Group, the umbrella company that includes Dorato Resources.

Through a series of option agreements, Dorato Resources Inc., a Canadian mineral exploration company set up to focus on the Cordillera del Cóndor - described by the firm's web site as 'one of the most important gold-bearing districts in the region since pre-Incan times' - has the right to acquire 100 percent of Afrodita, which has held seven concessions in the area since 1995.

Dorato says the option would involve 'an extensive land package of approximately 800 square kilometres.'

But the Peruvian constitution bans foreigners from owning property within 50 km of the border.

Canada is the second-largest investor in Peru, after Spain. The biggest Canadian company operating in this South American country is Barrick Gold, the world's largest gold miner.

Mining is one of the engines of the economy in Peru, which according to 'Top Mining Companies in Peru' put out by the Peru: Top Publications publishing company, is the world’s leading producer of silver and tellurium, and is second in zinc, third in copper, tin and bismuth, fourth in lead, molybdenum and arsenic, and sixth in gold and selenium.

In a communiqué, Dorato said 'The Peruvian government is stating that although Minera Afrodita has legitimate, long-standing mining claims and a valid drill permit, it does not own the surface rights and therefore cannot proceed with the previously permitted and officially endorsed drill programme.

'The company believes, based on legal advice, that this reasoning has no legal basis, as Minera Afrodita has only carried out exploration work on state-owned land, where such work is expressly authorised under Peruvian Mining Law pursuant to which no additional authorisation is required.

'The exploration authorisation was granted to Minera Afrodita in December 2009, after having agreed with the local population, in a public assembly in the Santa Maria de Nieva town, the undertaking of exploration activities in the area,' it adds.

But OSINERGMIN clarified that what Afrodita obtained on Dec. 9, 2009 was approval of the environmental impact study for the mining project, and that to begin exploration work it also had to prove that it had ownership or surface rights to the property in question, according to the country's environmental regulations.

And in the case of communally owned indigenous territory, a permit granted by two-thirds of the local community is needed.

'Approval of the environmental assessment study is not sufficient to begin exploration operations; other permits are also needed,' Shinno told IPS. He pointed out, for example, that the company also needs to apply for a water use permit.

The technical report by the Ministry of Energy and Mines explaining that the environmental impact study was approved clearly states that a land-use permit is needed.

On page 13, the report says 'it is the responsibility of the Afrodita SAC mining company to have, before the start of exploratory activities, surface rights to the land where said activities are to take place.'

The report, seen by IPS, also says that approval of the environmental impact study 'does not constitute the granting of authorisation, permits or other legal requisites that the mining project must have before it begins operations.'

Under OSINERGMIN regulations, Afrodita could be subject to sanctions for beginning exploration work without the required permits.

The prime minister took advantage of the company's failure to comply with the regulations to try to nip in the bud indigenous protests that threatened to spread once again in the country's Amazon jungle region.

The suspension of Afrodita's activities was one of the 16 demands that indigenous organisations of northern and eastern Peru set forth in a Feb. 22 protest.

But the Awajun are demanding more than a mere suspension of operations. They are worried about pollution of rivers and destruction of flora and fauna by mining industry activity in the area.

Their worries are not unfounded. In 2009, OSINERGMIN initiated legal procedures to sanction Afrodita for mismanagement of solid waste. The company has appealed. But the regulatory agency declined to provide further details.

For the Awajun people, the hill in the Cordillera del Cóndor where Afrodita has cleared four hectares of jungle represents Kumpanan or 'powerful hill', considered to be the father of lightning and the owner of air and water, according to the Lima newspaper La República.

The Awajun (also known as Aguaruna) are the biggest native ethnic group in Peru's Amazon region and have a reputation as fierce warriors.

Their leaders have denounced that Afrodita pays soldiers from military barracks in the area to guard the company's operations, rather than protecting the local population.

The Awajun also reported a year ago that the El Tambo military post was used as a base of operations by the company. At that time, the tension was at its peak, because local native anti-mine protesters had taken several mine workers hostage after they entered Awajun territory without permission from the local communities. The hostages were released unharmed after a few days.

For now, the government's announcement of a suspension of operations would appear to be merely a pain-killer or even a placebo, because the central problem remains unsolved: Afrodita will be able to continue operating as soon as it takes care of the pending bureaucratic steps.